John Arnold: belief

Transcript context

…What do we need to do to fix the grid? And is that just impossible? It’s not impossible. The problem with the grid is that, by nature of history, the US ended up with three grids. The first grid was in New York City in 1882. It followed the population and started to spiderweb out from there. You also had a grid start on the West Coast a few years later, but nobody really lived in the plains. The weather is bad. It’s hot summers and cold winters, and windy, and the soil is not great in parts of it. So, you had these two grids that started — East Coast, West Coast — and started to come in, and they never really met. Then you had this third grid that started in Texas, and Texas has always had this libertarian nature to it, and federal government stay away. In the Federal Power Act in 1935, the government came in and said, “We’re going to start regulating the industry,” Texas said, “You know what? We’re going to disconnect our interconnects to Oklahoma and Louisiana, and we’re going to stay intrastate and be independent.” Now, you have these three grids. Texas is DC. The other two are AC. The two that are AC are essentially on a different heartbeat. So, there’s virtually no linkage across those. I think what’s happened is that, as the nature of both load and generation has changed over time, you’re starting to see more discrepancies in pricing across regions. What really needs to happen is that these three grids that have been independent have different mix and portfolio of generation, and that their load has different profiles. There’s a lot of value to be created by linking loads. In the summer, you want to move resource generally north to south and vice versa in the winter. You get the benefits of time as the sun starts setting. The five o’clock hour, people start getting home from work. It’s obviously different in different parts of the US, and you can take advantage of that difference, and then the difference in weather patterns as they move from west to east. So, the more linkage you have, the better benefit you get. In terms of governance, would you keep them independent? Or just have them economically more interconnected for better arbitrage?…

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